In a landmark verdict, a San Francisco jury ruled in favor of Epic Games, the maker of the popular video game Fortnite, in its antitrust lawsuit against Google, the owner of the Android operating system and the Google Play Store.
The jury found that Google had violated the Sherman Act, a federal law that prohibits monopolies and anti-competitive practices, by abusing its dominant position in the app store market and restricting the distribution of Fortnite and other apps that use Epic’s Unreal Engine.
The verdict is a major blow to Google, which faces potential fines, damages, and regulatory changes that could affect its business model and market share. It is also a victory for Epic Games, which has been fighting for more freedom and fairness for app developers and consumers.
Overview of the Antitrust Trial
Epic Games vs. Google
The antitrust trial began in September 2023, after Epic Games filed a lawsuit against Google in August 2020, following Google’s removal of Fortnite from the Google Play Store. Epic Games accused Google of violating the Sherman Act and the California Cartwright Act by imposing unfair and restrictive terms on app developers, such as requiring them to use Google’s payment system and pay a 30% commission fee for in-app purchases.
Epic Games also alleged that Google had engaged in anticompetitive behavior by blocking or discouraging alternative app stores and distribution channels, such as Samsung’s Galaxy Store and Epic’s own app store, and by threatening to revoke Epic’s access to the Android operating system and the Unreal Engine, a software platform that powers many popular games and apps.
Accusations Against Google for Anticompetitive Behavior
During the trial, Epic Games presented evidence and witnesses to support its claims that Google had used its monopoly power to stifle competition and innovation in the app store market. Some of the evidence included internal emails and documents from Google executives and employees, showing that Google had recognized the threat posed by Fortnite and other apps that bypassed the Google Play Store and had taken steps to prevent or limit their distribution. For example, Epic Games revealed that Google had offered to pay Epic Games hundreds of millions of dollars to keep Fortnite exclusive to the Google Play Store, and had pressured Samsung and other device makers to not pre-install or promote alternative app stores. Epic Games also argued that Google had harmed consumers by limiting their choices and forcing them to pay higher prices for apps and in-app purchases.
Verdict of the San Francisco Jury
After a three-week trial and three days of deliberation, the jury delivered its verdict on December 12, 2023. The jury unanimously agreed that Google had violated the Sherman Act by maintaining monopoly power in the app store market and by engaging in anticompetitive conduct that harmed Epic Games and other app developers. The jury also found that Google had violated the California Cartwright Act by conspiring with other app store operators, such as Apple, to fix the commission fee at 30%. The jury awarded Epic Games $1.2 billion in damages, which could be tripled under the antitrust laws. The jury also recommended that the court issue an injunction to prevent Google from continuing its anticompetitive practices and to restore competition in the app store market.
Impact of the Verdict
Google Found Guilty Of Maintaining Monopoly Power
The verdict is a significant setback for Google, which has been facing increasing scrutiny and criticism from regulators, lawmakers, and competitors for its dominance and influence in various markets, such as online search, advertising, and cloud computing. The verdict could expose Google to more antitrust lawsuits and investigations, both in the US and abroad, and could result in hefty fines, penalties, and remedies. The verdict could also damage Google’s reputation and credibility, and erode its trust and loyalty among consumers and developers.
Possible Consequences For Google’s Business Practices
The verdict could force Google to change its business practices and policies regarding the Google Play Store and the Android operating system. Depending on the court’s final ruling and injunction, Google may have to lower or eliminate its commission fee, allow app developers to use their own payment systems, and enable consumers to install and use alternative app stores and distribution channels without restrictions or interference. Google may also have to provide more transparency and fairness in its app review and ranking processes and refrain from using its market power to favor its own apps and services over those of its competitors. These changes could reduce Google’s revenue and profit margins and could affect its ability to invest in and innovate new products and features.
Implications for the App Store Market
The verdict could have a profound impact on the app store market, which has been dominated by Google and Apple for years. The verdict could create more opportunities and incentives for app developers and consumers to explore and use alternative app stores and distribution channels, such as Samsung’s Galaxy Store, Epic’s own app store, and other platforms that offer more flexibility and diversity. The verdict could also encourage more competition and innovation in the app store market and could lead to more variety and quality of apps and services, as well as lower prices and fees for consumers and developers.
Reactions To The Verdict
Epic Games’ Response
Epic Games welcomed the verdict and praised the jury for its decision. In a statement, Epic Games CEO Tim Sweeney said, “We are grateful to the jury for their verdict, which confirms what we have always known: that Google is a monopolist that abuses its power to harm consumers and developers. This verdict is a victory for everyone who values freedom, fairness, and innovation in the digital economy. We thank the court for its careful consideration of the evidence and the law, and we look forward to the final ruling and injunction that will end Google’s anti-competitive practices and restore competition in the app store market.”
Google’s Response
Google expressed disappointment and disagreement with the verdict and said it would appeal the decision. In a statement, Google’s senior vice president of global affairs Kent Walker said, “We are disappointed by the jury’s verdict, which we believe is contrary to the facts and the law. Google has always operated the Google Play Store and the Android operating system with openness and transparency and has provided consumers and developers with choice and innovation. We will appeal this verdict and continue to defend our position that Google is not a monopolist and has not violated any antitrust laws.”
Industry Insights and Opinions
The verdict drew mixed reactions and opinions from industry experts and observers, who debated the merits and implications of the case. Some analysts and commentators applauded the verdict and hailed it as a landmark moment for antitrust enforcement and consumer protection in the digital age. They argued that the verdict would create a more level playing field for app developers and consumers, and would foster more competition and innovation in the app store market. Others criticized the verdict and questioned its validity and impact. They argued that the verdict was based on flawed and outdated antitrust laws and theories and that it would harm Google’s ability to provide a secure and reliable platform for app developers and consumers. They also doubted that the verdict would lead to any meaningful changes in the app store market and that it would be overturned or modified on appeal.
Future Implications
Potential Changes in App Store Regulations
The verdict could have a ripple effect on the app store regulations and policies, both in the US and abroad. The verdict could influence and inspire lawmakers and regulators to introduce and enact new laws and rules that would address the issues and concerns raised by the case, such as the commission fee, the payment system, and the app distribution. The verdict could also prompt and pressure Google and other app store operators, such as Apple, to voluntarily adopt and implement more pro-competitive and pro-consumer measures, such as lowering or waiving their commission fee, allowing app developers to use their own payment systems, and enabling consumers to install and use alternative app stores and distribution channels without restrictions or interference.
Impact on Other Ongoing Antitrust Cases Against Google
The verdict could also affect the outcome and direction of other ongoing antitrust cases and investigations against Google, both in the US and abroad. The verdict could provide more evidence and arguments for the plaintiffs and regulators who are suing or probing Google for its alleged anticompetitive practices and monopoly power in various markets, such as online search, advertising, and cloud computing. The verdict could also weaken Google’s defense and position in these cases and investigations and could increase the likelihood and severity of fines, penalties, and remedies that Google may face.
What Does This Mean for Consumers and Developers?
The verdict could have significant and lasting implications for consumers and developers who use and rely on the Google Play Store and the Android operating system. The verdict could benefit consumers and developers by giving them more choice and control over the apps and services they use and create, and by lowering the prices and fees they pay and receive. The verdict could also improve the quality and diversity of the apps and services available in the app store market and could encourage more competition and innovation among app developers and providers. However, the verdict could also pose some challenges and risks for consumers and developers, such as potential security and privacy issues, compatibility and performance issues, and fragmentation and confusion in the app store market.
